3rd Quarter 2009

(Click on graph for larger view.)

 

petitions as percent of manufacturing establishments 2006 - 2009

 

petitions per 100,000 manufacturing workers 2006 - 2009

 

tennessee petitions by industry

 

TAA petitions as percent of manufacturing establishments

(Trade Adjustment Assistance)

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There is some evidence that this is Tennessee's problem. Overall, out-of-state ownership of Tennessee operations is at the upper end of the southeastern states, and, on a percentage basis, is about a third again as high as for the entire U.S. Among manufacturing establishments, 13.4% in Tennessee are not locally owned. In comparison, across the nation 8.6% are owned outside of the state where they are operated. Since out-of-state operations are more likely to be targeted by a company in trouble, and Tennessee has comparatively more of this type of establishment, this fact probably accounts for the state's greater use of the TAA petition. On the other hand, the structure of ownership in Tennessee is very similar to the other states in region and does not account for the regional differences we see.* It appears that the regional difference stems from differences in industry structure, while the ownership factor becomes more important in the national comparison.

While the state generates more petitions across most industries, it's an odd fact that Tennessee's petition rate is unusually high in those industries that nationally generate the most petitions. The national industry that has the most intense need of the TAA is the textile industry. Tennessee establishments in this industry generate two-thirds again the number of petitions relative to the nation. The disparity is even greater in the next four most TAA intensive industries, where the state typically generates petitions at double the national rate. In other words, many of the state's requests for TAA funds come from the same industries that demand them nationally but at a much higher rate. Beyond the ownership situation, it's difficult to conclude why this might be. Some of the explanation may lie in the specific activities of the establishments in question. The rubber industry generates a lot of petitions, but the portion of that industry involved in tire manufacturing generates even more. Perhaps this is the situation. Likely more important is the geographical location of establishments. Tennessee plants are more likely to be located in rural areas than plants nationally.  Given that workers in these areas have fewer alternatives when a plant downsizes or closes, it may be that such establishments are more likely to produce TAA petitions.

TAA Petitions by County

To investigate this hypothesis, we can examine the geographical source of Tennessee's TAA petitions. The map shows petitions by county per its number of manufacturing establishments. (Lake County currently has no listed manufacturing plants.) As you can see, the most affected counties tend to be those outside the state's metropolitan areas. This suggests that rural location is an important factor in the petition process, although it may be correlated with industry location as well.

TAA petitions, granted or not, are indicative of economic stress. There is little positive to be said about Tennessee's disproportionate resort to them. Whether this usage relates to location, ownership, or industry structure, the conclusion is the same.  Relative to much of the nation, the state economy is going through an unusually difficult period.       


* A last possible explanation is that petitions are being encouraged by state or local governments to a greater degree than elsewhere, but there is no evidence for this. Relatively few Tennessee petitions originate, for example, from the Department of Labor and Workforce Development.

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